PNG's PM calls for special economic zone with Australia

Papua New Guinea's Prime Minister Peter O'Neill has called for a special economic zone to be established between PNG and northern Australia.

Speaking in Brisbane, Mr O'Neill said while he doesn't think PNG is ready for a free trade agreement with Australia, he would like to see the creation of a special economic zone that joins the two countries.

"I think it's important that we should consider possibly establishing a northern Australia, Papua New Guinea economic zone," he said.

Mr O'Neill says the zone would be powered by a massive hydroelectric project on PNG's Purari river.

"The Purari power project, even at stage one, can deliver up to 2,500 megawatts of affordable, reliable, and almost zero carbon emissions energy, " he said.

Mr O'Neill says PNG would also be prepared to open more asylum seeker detention centres if that was agreed to by both the Australian and Papua New Guinean governments.

"The Manus detention centre is being rapidly expanded, and if we need to expand it even further, or approve the construction of other detention centres around the country, only so if requested by the Australian Government," he said.

However, the prime minister is uncertain about how many asylum seekers PNG would take.

"From what I gather, the Australian Government is seeking up to 3,000, so we are not there yet," Mr O'Neill said.